Dole budget switch to help cut fraud: Employment department wins fight for pounds 1.8bn benefits role

THE DEPARTMENT of Employment will take over the pounds 1.8bn budget for unemployment benefit from the Department of Social Security in a move to crackdown on dole fraud and tackle continuing high unemployment, according to Whitehall sources.

David Hunt, the Secretary of State for Employment, has convinced colleagues that the payment of the Job Seeker's Allowance should be linked to his department's employment training schemes in 1996, when it replaces unemployment benefit.

It will also enable checks on benefit claimants to be made by a single department, to ensure those claiming the benefit are actively seeking work. Peter Lilley, the Secretary of State for Social Security, has been putting up resistance after initially appearing to accept the move, but ministerial colleagues believe he has lost the argument. 'There has been a row, but it looks as though it has been resolved now,' one Whitehall source said. 'Having a smaller budget may make it easier for Lilley in the spending round.'

Mr Hunt's colleagues said he has the backing of Downing Street. It will be presented as a move to answer criticism - repeated at the weekend by the Archbishop of Canterbury - that the Government is failing to do enough to tackle unemployment and its effects on communities. The Budget assumed unemployment would continue at 2.75 million until 1996-97 although it has been falling more sharply than expected.

Opposition parties are certain to attack the change as superficial tinkering with the system, while the safety net for the unemployed is being cut. The introduction of the Job Seeker's Allowance - disclosed in the Budget by Kenneth Clarke - is part of attempts by the Treasury and the Social Security Secretary to cut the pounds 80bn welfare state.

Unemployment benefit is paid to 715,000 claimants for 12 months, but that will be cut to six months for the Job Seeker's Allowance. After six months, the unemployed will have to rely on Income Support - about pounds 44 a week for a single adult and pounds 69 for a couple - but it is means-tested.

The payments to young people will also be reduced by about 20 per cent. The Treasury has targeted the employment budget for a fundamental spending review. The Budget statement said measures to restrain the growth of social security 'to a more affordable level' were included in welfare cuts totalling pounds 4.4bn in 1996-97.

The Chancellor said the Job Seeker's Allowance would 'cut through the bureaucratic maze' of Income Support and unemployment benefit paid by two different agencies, the Employment Service and the Benefits Agency employing between them 44,000 civil servants. The move may lead to cuts in staff numbers. It will consolidate the Employment Department in Whitehall, ending speculation that it could be disbanded by merging its training role with the Department of Education. Mr Hunt is expected to be moved in the July reshuffle, possibly to become chairman of the party. He could be replaced by Virginia Bottomley, Secretary of State for Health.

Meanwhile, the chairmen of Training and Enterprise Councils (TECs) have been forced to shake up their performance by Ann Widdecombe, the under-secretary for employment. Miss Widdecombe warned TEC chairmen they were breaking the Government's promise to provide guaranteed places within eight weeks for young people, when she discovered more than 5,000 youngsters had been waiting longer.